The 3rd Vienna Music Business Research Days were devoted to the “New Music Consumption Behaviour”. Therefore, recent music consumer surveys for the U.K. and for Austria were presented and the hypothesis of music prosumption was highlighted. In another contribution the impact of music file sharing on the quality of new music products was measured. Further the French authority for protection of copyrights on the Internet – HADOPI – was presented and the effects of its operations on P2P file sharing were highlighted. In the following panel discussion “Three Strikes and Out” music industry and copyright expertes controversially debated the concept of graduaded response scheme (aka “three strikes” models) such as HADOPI in France. In this context the question “Are File Sharers Pirates?” was already controversially discussed by a sentenced file sharer and the author of the the book “Free Ride. How Digital Parasites Are Destroying the Culture Business”.

The 3rd Vienna Music Business Research Days were opened by the Young Scholars’ Workshop on June 29. Nineteen young academics from seven countries presented their research papers, which represented the full range of music business research. The best Young Scholars’ paper was then awarded by and international jury at the end of the conference on June 30.

In the following the 3rd Vienna Music Business Research on “New Music Consumption Behaviour” is summarised and all presentations and discussions can be audio streamed. Most of the papers and power point presentation are also available as downloads.

At the beginning Joel Tenenbaum told his story why and how he was caught in the wheels of justice. In contrast to the vast majority of file sharers, who were accussed by the Recording Industry Association of America (RIAA) to infringe copyright by unauthorised music sharingon the Internet, he could not pay a compensation of some tousand US dollars out of court. When he was approached by the Harvard Law School professor Charles Neeson to support him in the litigation, the then 25 year’s old student rejected RIAA’s out-of-court settlement. Tenenbaum was fully aware that there was little room for interpretation in his case. However, he wanted to demonstrate that he just shared music files as million others have done it before and after him without being caught by RIAA. Further he wanted to evidence in court that file sharing does not economically harm the music industry. In contrast, he as a music fan and heavy user of music would be prepared to pay for music he likes and file sharing helped him to discover and sample new music.

Robert Levine agreed that RIAA’s strategy to sue individuals for file sharing was a misconception and was eventually abandoned in 2008. However, file sharers should be aware that they support dubious business models that earn a vast amount of money from advertisments and installing spyware by abeting copyright infringement.

I a contribution from the floor it was replied that the music and film industries failed to offer useful business models at the begin of the file sharing boom. This would have channeled advertising money to dubiuous torrent trackers and filehosters instead of to record labels and music publishers. Robert Levine insisted that the content industries have the legitimate concern to protect their and the copyright holders’ rights. In the meantime they have already recognized the signs of the times. They have licenced successful download and streaming services such as Apple’s iTunes music store, Spotify, rdio and others. Thus, the difference between legal and illegal music offerings must be clearly communicated to the consumers.

A teenager in the audience disliked this educational approach. He would be indeed aware that file sharing is against the law, but he wants to get the music he likes to listen to – from whatever source it comes. It is, therefore, anything else than unethical to share music files. His teenage peers condemn a just passive download mentality. They expect for each music download an upload to preserve the reciprocity of exchange.

Thus, the moderator asked for a way out of the dilemma: On the one hand there is demand for free content on the Internet, but there is also the legitimate interest to protect copyrights on the other. Peter Tschmuck, thus, proposed the widely discussed cultural flatrate model. If the Internet service providers would collect a fee of 5 to 10 Euros monthly from the Internet users, the money could be transfered to the copyright holders. That would solve two problems at once: There would be no reason anymore to sue individual file sharers, and copyright holders would be paid royalties. However, Robert Levine denied a cultural flatrate since it would be an inefficient state intervention into the market mechanism.

The panel discussion eventually came to an end with an appeal to discuss the challenges for the copyright in the digital age in order to come to a compromise meeting the interests of private and commercial music users, but also of copyright holders. The future will tell us if the social discourse will result in a satisfactory solution for all parties.

New Music Consumption Behavior on June 30, 2012

Michael Huber of the Institute for Music Sociology of the University of Music and Performing Arts Vienna presented “New Patterns of Musical Behaviour in Austria – Results of a Representative Study” at the beginning of the second conference day. In his study “Why Music?” that was commissioned by the University of Music and Performing Arts Michael Huber highlighted that listening to music is one of the favourite leisure time activities in Austria. Over half of the Austrian population listens to music more than two hours daily and there is no significante difference between younger and older music consumers. The generation gap opens when we look at the channels through which music is consumed. Whereas the intensity of usage of ‘old’ media such as radio, TV and records is similar in all age groups, the 30 year olds and younger significantly use more often computers, MP3-players and mobile phones to listen to music. The music preferences between the generations also differ. Older people in Austria prefer listening to the very ‘Austrian’ field of Schlager/volkstuemliche Musik, but also adult contemporary, classical music and jazz, whereas the youngsters tend to album oriented rock, contemporary hit music, hip hop, dance/techno. Half of the Austrian population also like to go to clubbings and in discos, whereby the under 30 year olds are over represented. Highly preferred is also the attendence of pop and rock concerts mainly by the generation under 30. Brass music, musicals and choir performances also rank high but mainly among older people. They also like to attend operas, classical concerts and concerts of Volksmusik. Jazz concerts are less popular than other live music performances, but they are equally preferred by all age groups. In this respect, Huber referred to jazz as the ‘new classical music’ for all generations. However, the data also highlights that 40 percent of the Austrian population does not pay for music. Those who spend money on music tend to ‘invest’ it into live performances rather than music media. In total, only 10 percent of the Austrian spends money for recorded music. The willingness to pay for music highly corresponds with the education level. Thus, school-leavers spend significantly less on music events than the higher-educated. Further Michael Huber also found out that more than half of the Austrians sing to themselves e.g. in the bathroom. 32 percent prefer to sing with others. 24 percent has learned to play a music instrument, whereas music skills highly correlate with the education level. Not even a quarter of school-leavers have learned an instrument, but over two thirds of graduates have. To sum up, Michael Huber’s study “Why Music?” highlights that music consumption behaviour in Austria significantly differs only between different age groups and varies with the educational level. Other demographic variables such as ethnic background, gender and income level, thus, does not affect the music consumption behaviour in Austria at all.

In the next presentation David Bahanovich and Dennis Collopy of the University of Hertfordshire highlighted the results of a recent survey on music experience and behaviour in young people in the U.K. This is now the third wave of a longitutional study, which was conducted the first time in 2008 and for the second time in 2009. 1,888 young people from 14 to 24 years old were asked for their music habits. The key findings are:

The computer is no longer their main entertainment hub. In the past 2 years it has been superseded by the mp3 player. 65 percent listen to music on their mp3 player every day. Only 18 percent use their CD player on a daily basis.

The average computer or hard drive contains almost 4,000 tracks. The average number of tracks on mp3 players rose sharply from 1,829 in 2009 to 2,796 in 2011.

Young people are using the growing range of licensed digital music stores and they still want to own music on physical formats because of their superior sound quality.

There is large ‘value gap’ between the substantial popularity of music and the amount of money spent on it, especially when compared to other entertainment types.

Although close to 40 percent of 2011’s respondents still download music using P2P networks or torrent trackers this represents a very steep decline from 61 percent in 2009. The main reason for filesharing is still that it’s free. Respondents also continue to use P2P to find music that is not commercially available or to experiment and ‘try-before-they-buy’.

69 percent of respondents who are P2P downloaders would be interested in paying for an unlimited, ‘all-you-can-eat’ MP3 download service.

Despite enthusiasm for streaming music online, just 12 percent of the respondents are prepared to pay for an ad-free premium account.

The vast majority (92 percent) of respondents knew that sharing copyrighted content (as above) is not legal. 31 percent support measures to disrupt Internet connections by the ISPs of those users who share copyright content without the owners consent.

The study highlights that the music consumption behaviour of young people is very complex and does not follow simple explanation patterns.

In his speech Carsten Winter highlighted the “Prosumers And Their New On-Demand Culture” as a short case study of the Berlin club scene that was investigated in a research project of the Institute of Journalism and Communications Research of the University of Music, Drama and Media Hanover/Germany. Carsten Winter explained music prosumption as a new form of music use in which the spheres of active music production and passive music consumption cannot be separated anymore. A prosumer is a producer and consumer of music at the same time. Whereas music products were pushed to the consumers through the value-added chain of the traditional music industry, the music users nowadays (co)-create the value of music by creating playlists, by rating YouTube music videos, spending money for crowdfunding activities and remixing & mashing up music. The former push culture was transformed to a pull culture by the digitalization. In the new context music users want to adopt music to their individual preferences.

After the lunch break Joel Waldfogel of the University of Minnesota assessed the impact of file sharing on the quality of new music products. The physical sales figures published by the Recording Industry Association of America (RIAA) show a downward trend since 1999 that could not be compensated by the increase of digital sales. In total the market volume for recorded music has shrank in the last decade. However, Joel Waldfogel did not directly address the causes for the sales slump but assessed the impact of file sharing on the quality of new recorded music. Therefore he did not only count the number of new releases, but tried to take into consideration the quality of new records. He used three different approaches: The first is an index of the quantity of high-quality music based on critics’ retrospective lists. The second and third approaches rely directly on music sales and airplay data, respectively, using of the idea that if one vintage’s music is better than another’s, its superior quality should generate higher sales or greater airplay through time, after accounting for depreciation. The results of the first method suggested that there is no evidence of a reduction in the quality of music released since 1999, and the two usage-based indices suggested an increase. Joel Waldfogel gave the following explainations for the relative high quality of new releases in the recent years:

(1) a reduction in the cost of bringing products to market,

(2) artists facing the threat of piracy or unbundled song sales, provided better music

(3) new digital music distribution channels such as Internet radio allows the promotion for artists ignored by traditional radio

(4) more experimentation leads to the discovery of additional ‘good’ music.

Thus, Joel Waldfogel concluded that we have to re-interpret the impact of the digital revolution on the music industry. Instead of stressing the threats of piracy caused by digitization, it should be seen as the crossing of the Red Sea to reach the promised land – however the journey has not come to an end yet.

An article on Joel Waldfogel’s presentation can be read on heise online

On Saturday afternoon, the conference was continued by a presentation of Rose-Marie Hunault on the French authority for protection of copyrights on the Internet HADOPI (Haute Autorité pour la diffusion des oeuvres et la protection des droits sur internet). After a short review on the emergence of the ‘Lio d’HADOPI’ and the authority’s organisational structure, Mrs. Hunault explained in great detail the process of the graduaded response scheme also known as ‘three strikes’ model. Right holders, who suspect a copyright infringement have to submit data of the infringing IP address to HADOPI’s CPD commission. The commission checks the allegation and in the case of verification the first recommendation is emailed to the Internet subscriber. If no further infringement behaviour can be observed within a year, the data on the alleged infringer will be deleted. However, if further infringing behaviour is observed a second recommendation is sent by email. If further observations are made a letter is sent to the subscriber with proof of receipt. HADOPI’s CPD commission then deliberates if the case should be referred to the Public’s Prosecutors Office or not. However, this last decision has to be made by a judge. In an abridged trial the infringer is punishable by a penalty that ranges from paying a fine to cutting off the infringer’s Internet access up to one year. Until the end of June 2012, however, no Internet access was cut off. Mrs. Hunault then presented data that should demonstrate the effectiveness of the graduated response scheme in France. Since HADOPI first began sending email warnings in October 2010, 1.09 million first recommendations have been sent until the end of May 2012. A great majority of alleged copyright infringers of those having received a notice did not give rise to the need for a second notice. However, 99,000 second recommendations were sent. Again a great majority of the infringers stopped their illegal behaviour. Thus, a rest of 314 infringers received a notification letters at the third step of the procedure. Mrs. Hunault concluded that the graduade response scheme did not only discourage alleged filesharers to stop their infringing behaviour but has also an positive impact on the rest of the Internet population in France, since different surveys highlight a decrease in file sharing traffic since HADOPI was established in October 2010.

An article on Rose-Marie Hunault’s presentation can be read on heise online.

In the following panel discussion IP-expert Martin Kretschmer of Bournemouth University replied to the moderator’s question on the recently implemented graduated responses scheme in the U.K. that he wondered about the ignorance of the policy makers, who had commissioned the Gowers Report and the Hargreaves Report that would be contradicted by recent copyright legislation. The British music manager and consultant of the World Intellectual Property Rights Organization (WIPO), Peter Jenner, then vehemently opposed ‘three strikes’ measures. However, he appreciated Rose-Marie Hunault’s assurance that HADOPI is a temporary institution, which could be dissolved when either copyright infringement would come to an end or a new legal framework would be put in force. Currently HADOPI costs EUR 12m annually. However, it should be differentiated between the music and film industry. Whereas the French film industry is on a solid growth path, the music industry suffers from a deep recession. Therefore, HADOPI is needed to battle copyright infringement. Nevertheless Peter Jenner did not agree that state intervention on the private users’ level would be the solution. “Creating a business model for the music industry is a duty of the economy and not of the government”, he added. Rather, the record labels should learn to adapt to the new circumstances and to accept that Internet worked more like radio than a retail store. The Austrian music producer Harald Hanisch agreed and added that currently each one is a record label and music publisher by herself. At the end of the day, however, musicians have to earn their living and copyright infringement would make it difficult to do so. Peter Jenner responded that the discussion on legal and illegal practises on the Internet is obsolete as long as the music industry would not offer attractive business models. The discussion that was conducted by the German journalist, Stefan Krempl, eventually came to the conclusion that the copyright debate is far from a solution in the era of digitization.

Young Scholars’ Best Paper Award

The conference was closed by awarding the best paper of the young scholars’ worshop that took place on June 29 at the University of Music and Performing Arts Vienna. The workshop’s program and almost all papers could be downloaded from the workshop’s homepage. However,“The ‘artepreneur’: A model for future success and personal fulfillment for artists” by Maike Engelmann, Lorenz Grünewald and Julia Heinrich was awarded by an international experts’ jury and will be published in the next issue of the International Journal of Music Business Research.

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